Web's Pre-listing Appraisals A Boon To Sellers

The nation's housing

October 17, 1999|By Kenneth R. Harney

What's the next big trend in selling the American home?

Real estate appraisers are betting that it's the pre-listing appraisal posted on the Web, offering a detailed property description, analysis of up to six ``comparable'' houses and professional valuation of the seller's property. It would provide prospective buyers hard appraisal data about a home upfront, rather than later, when they go to apply for a mortgage.

Traditionally, professional real estate appraisers work for lenders, even though their fees are paid by home buyers. Lenders use their data - typically set out in a Fannie Mae-Freddie Mac Uniform Residential Appraisal Report - to determine how much they can safely lend against a property.

But now appraisers see an entirely different focus for their rich lode of home valuation data: home sellers who want independent, professional guidance apart from realty agents on how to price their house to sell for the maximum amount within a specific time period. Once the pre-listing appraisal is completed, it can then be turned into a marketing tool - posted on the Internet, either on a realty agent's Web site, a for-sale-by-owner Web site, or on specialized sites designed for pre-appraised homes.

The national trade organization that represents 20,000 licensed real estate appraisers - the Appraisal Institute in Chicago - is developing a Web site called OLA.com that will offer such services early next year to home sellers nationwide. (OLA stands for On-Line Appraisal.) A potential buyer, for instance, could visit the site and obtain more information on a listed home than is currently available anywhere. Even the most popular Web sites for home shoppers - Realtor.com and HomeAdvisor.com - do not provide the wealth of physical and market data about individual properties that a professional Uniform Residential Appraisal Report can supply.

That's because appraisals virtually never have been part of the marketing phase for homes. But in the Internet age, where smart consumers demand the richest possible information online - free and available for inspection anytime of day or night - professional appraisals online appear to be a natural.

Take the experience of John W. Ross, who recently sold his house in Denver to move to suburban Chicago, where he is now executive vice president of the Appraisal Institute. Like most sellers, Ross and his wife interviewed numerous local real estate agents before deciding to list with one. The vast majority of the agents, according to Ross, suggested he list the house in the $187,000 to $195,000 range.

Uncertain of where to price it, the Rosses decided to get a pre-listing appraisal - to show to agents and, ultimately, to prospective buyers. After examining the property in detail and researching comparable homes in the area that had sold within the past few months, the appraiser suggested a listing price of $205,000 if the Rosses wanted to sell within 60 days, and $204,000 if they wanted to sell within 45 days.

The Rosses showed the appraisal to the agent they selected and listed the house for $204,000. It sold quickly for ``a little over $201,000,'' Ross said. The appraiser's work ``basically put as much as an extra $14,000 in our pocket,'' says Ross. The cost of the pre-listing appraisal: $325.

Under the Appraisal Institute's forthcoming OLA.com initiative, appraisers conducting pre-listing valuations will post them on the OLA.com Web site, hot-linking to any other sites the sellers or the sellers' agent cares to use. The OLA.com site will present the house through conventional and virtual-tour exterior and interior photography and will present the full Uniform Residential Appraisal Report for all visitors to see.

The report contains virtually every scrap of information one needs to evaluate a home: square footage, room plans, lot description, property taxes and assessment, commentary about physical condition of all major features and structural items, plus detailed analysis of comparable homes sold in the immediate market area.

After a national test involving about 300 appraisers starting the first week of November and lasting until March 2000, OLA.com will open its doors to all sellers, buyers, brokers and house-shoppers anywhere in the country. The fact that the participating appraisers will know that their work will be on public display - and available to critiques by state licensing regulators - should exert strong pressure to produce high-quality, accurate and defensible valuations, Ross says.

Will buyers have to get new appraisals when they apply for a mortgage? They shouldn't in many instances, thereby cutting their acquisition costs by $300 to $400, unless they choose to split the expense with the seller.